Is climate money coming now?

CO₂ price drives heating costs - climate money is still a long time coming

The CO₂ price on fossil fuels is gradually increasing - and with it, heating costs. From 2027, national emissions trading will be transferred to the European system, which will mean additional cost increases. However, the climate money originally planned to cushion the social impact of these costs has not yet been introduced. New demands are now being made.

From 2027, the building sector will also be subject to European emissions trading. The change in CO₂ pricing could cause oil and gas prices to rise significantly. Baden-Württemberg is therefore calling on the federal government to support particularly affected households with EU funds. The deadline for corresponding applications is the end of June 2025.

The coalition agreement of the coalition government announced climate money as compensation - but so far it has remained an announcement. The revenue from CO₂ pricing currently flows into the German government's Climate and Transformation Fund, which has been allocated around eleven billion euros this year alone. This fund will be used to finance the energy transition, among other things.

EU aid for social compensation called for

Winfried Hermann (Greens), Transport Minister in Baden-Württemberg, called for relief for consumers in the run-up to the Transport Ministers' Conference on 2 April. "The higher prices must be socially cushioned," he explained.

According to Hermann, the federal government can submit a social climate plan to the EU and thus receive up to 5.3 billion euros in funding for social mitigation. However, if the federal government misses the deadline, it is unclear what will happen with these funds.

Baden-Württemberg submitted a motion to the Conference of Transport Ministers on this issue. The federal states should jointly call on the federal government to take action quickly and apply for the EU funds.

Study shows: Only tangible climate money is convincing

A recent study by the German Institute for Economic Research (DIW) also supports the call for effective compensation: study author Lars Felder emphasizes that the German government must take concrete measures instead of just making vague announcements.

The carbon price was introduced in 2021 at 25 euros per tonne and has risen gradually since then: the price was 30 euros in 2022 and 2023 and 45 euros in 2024. Since the beginning of 2025, the price has been 55 euros. A price corridor of between 55 and 65 euros per tonne is planned for 2026.

According to the DIW survey, around 50 percent of respondents accept a CO₂ price of 45 euros, provided 80 percent of the revenue is returned as climate money. Even a price of 200 euros would be acceptable for four out of ten respondents - with appropriate compensation. However, 44% reject CO₂ pricing in principle, mainly due to the expected additional burden (39%) or doubts about the climate effect (26%).

Climate money: concrete implementation still uncertain

The Federal Council called for this in a resolution on 22 March 2024. In a resolution on March 22, 2024, the Federal Council demanded that the Federal Government create the legal and technical basis for the direct payment of the climate money in the same year. The payment should be made automatically by the federal government, not via state authorities.

However, in an answer from the federal government to a question from the Left Party on November 21, 2024, it was stated that a decision on the actual payment of climate money would not be made until the next legislative period.